Shares of 2014's 'wonder stock', Liquefied Natural Gas Ltd (ASX: LNG), soared more than 7% today following the release of a market sensitive notice this morning.
In an announcement to the ASX, Liquefied Natural Gas Ltd said one of its fully-owned subsidiaries, Bear Head LNG, has filed an updated registration document with Nova Scotia Environment (NSE).
Bear Head LNG owns a site in Nova Scotia, Canada, where it plans to build a Liquefied Natural Gas liquefaction, tolling and export facility. Put simply, its facility will connect to gas fields via a pipeline and compress the gas into liquid for transportation via ship to foreign countries – where prices for energy sources (like LNG) are much higher. Liquefied Natural Gas Ltd will collect a small fee per unit of gas processed and assume no commodity price risk.
Liquefied Natural Gas Ltd also owns Magnolia LNG, located in Louisiana, USA, which is pursuing a similar strategy to Bear Head. Both facilities are targeting output of eight million tonnes per annum (8mtpa) and first production within the next five years.
Today's update on the Bear Head LNG project comes just weeks after it announced it had completed 9 of the 10 necessary federal, local and provincial approvals before construction can begin. The latest lodgement, to the NSE, is the final requirement.
In the same announcement, Liquefied Natural Gas Ltd said Bear Head had secured an agreement with the Assembly of Nova Scotia Mi'kmaq Chiefs. The Memorandum of Understanding (MOU) "is a commitment by both parties to work together to ensure meaningful Mi'kmaq participation and continued negotiations in relation to a benefits agreement," the company said.
Bear Head LNG also announced the appointment of Darshi Jain as VP of Engineering and Construction. Mr Jain has decades of experience in management roles on multi-billion dollar projects. This includes 33 years with KBR, a leading global engineering business which is currently working to develop Liquefied Natural Gas Ltd's Magnolia project.
Should you buy Liquefied Natural Gas Ltd shares?
Despite rising over 1,000% since the beginning of 2014, Liquefied Natural Gas Ltd could have further to run in 2015, if it can continue to move seamlessly through the regulatory and operational hurdles it plans to negotiate. However as I noted in this article in the current low oil price environment Liquefied Natural Gas Ltd shares are a high-risk/high-reward opportunity.
